U.S. 30-Year Treasury Yield Rises to Highest Level Since 2002

Yields on U.S. Treasury bonds continue to rise rapidly. The yield on the 30-year Treasury note rose on Tuesday for the sixth consecutive trading day, reaching 5.61 percent. This marks its highest level since 2002.

The rise is part of a broader sell-off in the global bond market. High oil prices are fueling new inflation concerns, while investors are factoring in further interest rate hikes by central banks.

U.S. Treasury bonds have been under pressure for months. The approximately $32 trillion market is now experiencing its largest sell-off since the turmoil surrounding U.S. import tariffs in April 2025.

High oil prices are playing a significant role in this. The war in the Middle East has caused energy prices to rise sharply, which could keep inflation high for longer. As a result, investors are increasingly anticipating that central banks, including the Federal Reserve, will have to raise interest rates further.

In the United States, this is compounded by a relatively strong economy. At the same time, investors are concerned about the size of the U.S. national debt.

New economic data released on Tuesday did little to change this outlook. Consumer confidence declined, and the number of job openings came in lower than expected. Still, the figures were not weak enough to allay concerns about further interest rate hikes.

This is reflected across virtually the entire bond market. The U.S. 10-year yield rose to about 5.28 percent, its highest level since 2007. The 2-year yield stands at around 4.93 percent, making it one of the few major maturities still below five percent.

The large supply of new corporate bonds is also a factor. Paramount Skydance launched a long-awaited bond offering on Tuesday to finance its acquisition of Warner Bros. Discovery.

The company aims to raise approximately $32 billion. The offering is part of a broader $52 billion financing package and, according to Bloomberg, ranks among the largest-ever issuances of high-credit-quality corporate bonds.

According to interest rate strategist Monty Gandhi of SMBC, the size of this deal may explain part of the rise in long-term U.S. interest rates. This is because new corporate bonds compete with government bonds for investors’ available capital.

Meanwhile, strategists at Citigroup are speaking of a slight “buyer strike” in the U.S. bond market. Investors appear more reluctant to purchase new debt at current prices.

According to Yardeni Research, the unwinding of the so-called yen carry trade may also be contributing to the wave of selling. In this strategy, investors borrow cheaply in Japanese yen and then invest the money in assets that offer a higher return. If these positions are unwound, it can create additional selling pressure.

In addition, this time of year has historically been a weak period for U.S. Treasury bonds. Over the past ten years, Treasuries have lost an average of 0.9 percent in September, based on the median. This was followed by a median loss of another 0.7 percent in October.

This September is already on track to be the worst since 2023. The war between the United States and Iran, concerns about U.S. government finances, and the Fed’s more hawkish stance increase the risk that the turmoil will persist into October.

Moreover, as the year draws to a close, a large amount of debt securities could once again flood the market. Added to this is the enormous capital requirement for AI investments. According to Masahiko Loo of State Street, this will keep competition for available capital intense, which could keep U.S. interest rates volatile.

However, not everyone expects the sell-off to continue. Wall Street veteran Jim Bianco has become bullish on U.S. Treasuries for the first time in six years. Bond investor Chris Iggo also expects a recovery, while Mark Dowding of RBC BlueBay Asset Management believes the global sell-off has gone too far.